Corporate-Backed Trans-Pacific Partnership Shrouded in Secrecy

(Photo: Public Citizen)The Trans-Pacific Partnership (TPP), a multilateral trade deal currently being hammered out by the United States and ten other countries, could end up affecting every human being and dollar of wealth on the planet. The extent to which it will is clear to no one, apart from negotiators. But the deal, in its current form, has been in the works since 2010, involves Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam, and is open to all 21 countries in the Asia Pacific Economic Cooperation (APEC) region. US Trade Representative (USTR) Ron Kirk, who just left his post in early March, and other top negotiators have said that they would welcome China, and recent reports in the Japanese and Australian media indicate that Japan is set to join. Thus, even the most minor of edits to the draft text could end up making or breaking people from Brisbane to Bangor. But legislators around the world are being kept in the dark about what they're voting on until the deal is hammered out; it's expected to be completed this year. When it's finished, if the experience of Congress here is any indication, legislators will be feeling extraordinary pressure from corporate lobbyists and their heads of state to accept the deal without a fuss.

The smoke-filled room itself is no secret. Kirk and his counterparts have said that talks must be kept confidential, in Kirk's words, "to enable negotiators for various governments to share information and have frank conversations that result in progress toward concluding a trade agreement."

But other officials, including American legislators and their staffers, sing a different tune. They decry the opacity as a way to ram the deal through Congress.

"When challenged about the conflict with the Obama administration's touted commitment to transparency," TPP critic and Public Citizen trade lawyer Lori Wallach wrote in The Nation last year, "Trade Representative Kirk noted that after the release of the Free Trade Area of the Americas (FTAA) text in 2001, that deal could not be completed. In other words, the official in charge of the TPP says the only way to complete the deal is to keep it secret from the people who would have to live with the results."

"The Doha Round of WTO [World Trade Organization] expansion, the FTAA and other corporate attacks via 'trade' agreements were successfully derailed when citizens around the world took action to hold their governments accountable," she noted.

While there is no evidence that multinationals themselves have access to the draft agreement, a pair of well-connected corporate lobbyists told Truthout - in response to a question about the USTR's responsiveness - that they are pleased by the direction of the talks and the way in which the USTR is keeping them abreast of developments.

At a February 12 panel discussion on Capitol Hill featuring Barbara Weisel, the USTR's chief TPP negotiator, Rick Johnston, a senior vice president and director for international government affairs at Citigroup, emphatically stated that he has been "very, very, pleased" with the way the USTR has dealt with the company's TPP-related concerns.

"With a trade agreement, if you don't have the business community supporting the idea of the United States participating in that agreement, it's very likely not to happen," he said. "So the Trade Representative's office, Barbara and her team have been very, very forthcoming to the extent they can, in talking with us about this agreement, how this negotiation is going forward."

"We're very grateful with the amount of time and energy that the people at USTR devote to trying to keep us apprised and trying to test us and determine what works and what doesn't work. It's difficult. Because these are negotiating texts, the negotiators are constrained in terms of what they can and can't share with us," Johnston said, describing the business community as "sort of part of a team."

"Granted, we're not first string in terms of frontlines of the negotiations," he added, "but we've got, I think, by this engagement, what's been mutually reinforcing."

Johnston appears to be well in the know, too, as one would expect a top lobbyist for a too-big-to-fail bank to be. A press release once described him as someone who "has advised both US and foreign government leaders as well as major multinational corporations on a broad array of commercial and strategic transnational issues," adding that he has served as "international trade counsel" to the Senate Finance Committee and as an adviser to the US International Trade Commission, "an independent, quasijudicial Federal agency with broad investigative responsibilities on matters of trade." At the discussion hours before Obama feted the TPP in his State of the Union address and revealed the existence of exploratory discussions about "a comprehensive Transatlantic Trade and Investment Partnership with the European Union," Johnston foreshadowed the EU partnership and said the TPP would heavily influence it.

"The short and sweet of it is the TPP really is setting that high-water level for all these trade negotiations. And I would suggest that the TPP - you're going to see a lot of that in the International Services Agreement," referring to service trade liberalization negotiations Kirk revealed in January taking place between the United States, Japan, the EU and 18 other economies.

"You'll probably see a lot of it creep into the US-EU negotiation, which, rumor has it, might be endorsed by the president tonight," he correctly predicted.

Another lobbyist on the panel, Steve Lamar, the executive vice president of the American Apparel and Footwear Association, was similarly effusive in response to the question posed by Truthout.

"There have been opportunities for stakeholders to present and interact with the negotiators - not just the US government negotiators, but other negotiating teams as well in a variety of different fora," he said.

"There has been a lot of experimentation. I've heard some very positive feedback from a variety of groups" who participated, he commented, remarking that he had seen Weisel and other "chief negotiators" involved in the process.

"It's not just show. You really see engagement and discussion going on at the rounds themselves," Lamar said.

According to tax filings, the American Apparel and Footwear Association took in just over $5 million in revenue in fiscal year 2011, and, according to disclosures aggregated by the Center for Responsive Politics, spent $733,672 on lobbying in 2012. The association's web site claims that its board of directors is "comprised of top industry executives," including executives from New Balance, Haggar, Jockey, Donna Karan, Kenneth Cole, Perry Ellis, and others with an interest in the textile industry.

Weisel, however, stressed that the USTR is opening doors to all sorts of interest groups.

"We engage with stakeholders from the business community, from the NGO community, consumer groups, stakeholders that represent lots of different interests," she said after Johnston and Lamar lavished the USTR with praise.

Indeed, federal law requires the USTR to consult with bodies known as Trade Advisory Committees, which can include up to 45 members and "shall include representatives of non-Federal governments, labor, industry, agriculture, small business, service industries, retailers, nongovernmental environmental and conservation organizations, and consumer interests." Other single-issue advisory committees on labor, agriculture and other interests are also part of the process. Other interest groups can also stake a claim to some of the USTR's time by registering to participate in a "direct stakeholder engagement" process.

Weisel also insisted that the USTR has had a robust working relationship with Congress.

"We're spending quite a bit of time up here on the Hill," she said. "I personally spend quite a bit of time up here on the Hill. And we know that there are different perspectives on a lot of these issues, and they are important policy issues."

But some legislators and staffers on the Hill have been outspoken about what the deal could entail and how negotiations have been conducted. In November, 24 Senators wrote to President Obama expressing concerns about the TPP's potential effect on "job creation" and "middle class jobs," citing provisions about "Buy American" rules, "Rules of Origin" guidelines, labor rights, currency manipulation, state-owned enterprises, and incentives for off-shoring. One of those lawmakers, Sen. Sherrod Brown (D-Ohio) told Truthout that his feelings were "mixed" about the USTR's responsiveness to his office's concerns.

"They made some improvements ensuing from our discussions on South Korea," he said, referring to the Korea Free Trade Agreement. "They have been open on some trade enforcement issues. They aren't as aggressive as I think they should be protecting American interests and American jobs and American manufacturers. But the door's open," he commented, adding that "they're better than other administrations [have been]."

Senator Brown pointed out that his recent appointment to the Senate Finance Committee should give him firmer ground to stand on in TPP discussions. Under federal law, members of the House Ways and Means and the Senate Finance Committees are designated official advisers to the USTR. In addition to every Representative and Senator, those panels' staffers – being on "committees of jurisdiction" – are made privy to the American delegation's proposals.

Not a single person in Congress, however - or in any legislature of any country party to the deal - is allowed to even once-over the latest version of the actual draft agreement. In an email to Truthout, USTR spokesperson Carol Guthrie confirmed that senators and Congresspeople on committees of jurisdiction, along with their staffers, are only allowed to see the USTR proposals - not the working agreement. She added that "others at the discretion of the committees' chair and ranking member" are given access to USTR proposals.

"In addition, when a US TPP proposal may potentially affect issues that fall under other committees' jurisdictions - e.g., agriculture - then the committee staff have access to those TPP proposals," she added.

But the disconnect between the average rank-and-file staffer and the TPP is significant - even if the USTR's proposals were accepted in the final document verbatim - considering that the majority of those who make Congress run on a daily basis have little idea of what to expect, in terms of the legal minutiae that ends up being rather significant and difficult to comprehend. One staffer for Senator Brown told Truthout that "there are a lot of members that are not satisfied with the level of transparency."

Guthrie said that senators and their staffers must view proposal texts in a Sensitive Compartmented Information Facility, or SCIF.

"We bring the text in hard copy to their SCIF complex in the Capitol at their request. We also make our SCIF available for their use. Secondly, Senate rules require logging on to the secure web site from a secure workstation," she said.

House rules are less constraining, however.

"We bring [House] members and staff the text in hardcopy to their offices, at their request, or they can log in to the cleared advisers site from their desks and laptops," Guthrie said.

Nonetheless, with the updated draft itself guarded in confidentiality and the USTR proposal a forbidden fruit to a majority of staffers, there is a feeling on the Hill that Congressional oversight of the TPP is a formality.

The aide speculated that the pact is being pushed by USTR career bureaucrats and embraced by the Obama administration as a favor to the business community. The all-powerful Chamber of Commerce, which has lobbied extensively on the TPP, is no longer on the backfoot, as it was during debates over health care and financial reform - despite gifts to the insurance industry ingrained in the Affordable Care Act and the voluminousloopholes that lobbyists eventually helped punch into Dodd-Frank.

The TPP will give big business additional leverage through regulatory ceilings and dispute resolution tribunals. The latter, used to enforce the former, could increase international litigation risk for new regulations - a threat that already exists, courtesy of NAFTA, CAFTA and the WTO. The panels create additional legal venues in which either foreign investors can demand compensation for losses borne through "regulatory expropriation," or in which states can be awarded the right to impose retaliatory tariffs on counterparts deemed to be pushing biased regulations. They don't create additional opportunities for workers to sue a foreign country or company for allowing the murder of union leaders, nor do they offer an additional medium for a government to sue a company for environmental damage. The result is the creation of new institutions fueling the race to the bottom wrought by an interpretation of global economic integration that affords capital outsized privilege. The chilling effect on regulation is greater in poorer countries that can be cowed by the panels.

These dispute resolution tribunals, whether they mediate disputes between states or disagreements between investors and states, are said to be key to enforcing arguably the most important principal underpinning these trade agreements: "non-discrimination." If a country's own investors and companies are given preferential treatment, the deal isn't worth the paper it's printed on. But discriminatory practices aren't always at the heart of conflicts brought before tribunals. In the wake of NAFTA, for example, Mexico lost a controversial investor-state tribunal that cost its government $16 million in 2001 and cast doubt over the resilience of environmental regulations. Metalclad, an American landfill management company, had received permission from the Mexican government to operate a dump in Guadalcazar, in the state of San Luis Potosi. But while the plans had been approved by federal authorities, Metalclad had its permit to operate the landfill revoked by the state's governor in 1995. It also hadn't acquired permission from municipal authorities, which wasn't exactly an unprecedented outcome: Metalclad had purchased the site from a Mexican company called Coterin, which similarly failed to receive municipal permission to operate the landfill. There had been no sort of significant discriminatory practices in this case, but the tribunal decided that the company was not afforded a "minimum standard of treatment" that NAFTA provided to foreign investors. The decision was appealed to a Canadian court (a neutral venue). Although it disagreed with the ruling on minimum standard of treatment, it upheld most of the punitive damages. Thus, while discrimination wasn't even an issue, Metalclad was afforded a legal outlet that the Mexican company from which it acquired the asset did not have the right to.

The USTR, however, insists that these tribunals wouldn't have any sort of direct effect on regulations in the United States - that any decision made by investor state tribunals would merely levy fines and not "prevent our government or any participating government from regulating in the public interest."

"Nothing being negotiated would give any arbitration body the authority to overturn or enjoin any government measure, even one that violates the agreement," Guthrie wrote. "The neutral, international arbitration panels that can be set up under the agreement have no power or authority to direct changes to any federal, state, or local entity, period."

"US proposals recognize the right of other countries to regulate in their own public interest on financial issues, labor and the environment, and every other issue the TPP covers," she continued, "because we would never give up the right for the US government to regulate on these issues in the interest of Americans."

She added that the United States has "never lost an investor-state dispute, and never paid a penny in damages."

"The reason we can win, and do, is that these investment rules are based on the same fundamental rights already afforded to Americans and foreigners alike under the US Constitution and US laws," Guthrie continued. "Nothing in our agreements provides foreign investors with greater substantive rights than US investors already receive under US law."

She also noted that the three-mediator tribunals contain panel members selected by both a plaintiff and defendant, and one selected by both sides (failing that, "a neutral international organization" picks the mediator to round out panel).

"Transparency is also a top priority for the United States in the arbitration process. Investment arbitration hearings under US trade agreements are public and all key documents and tribunal decisions are public, as well," said Guthrie.

However, experts told Truthout that the USTR's public statements on tribunals have been problematic.

"Past victories are no predictor of how TPP rulings will turn out for the US," said AFL-CIO Trade and Global Policy Specialist Celeste Drake regarding the United States government's immaculate record at NAFTA investor-state resolution tribunals. "And legitimate public interest shouldn't be pared down anywhere," she added.

Public Citizen's Wallach was more dismissive of claims about the United States having never lost anything in investor-state dispute courts. Taxpayers must shoulder the burden of tribunal costs "even when cases are dismissed," she said.

With respect to the USTR's claims on transparency, Wallach said that the World Bank investor-state tribunal system empowered by NAFTA doesn't release documents "or even notice a case is happening" unless plaintiffs agree to it.

She said that there are no conflict-of-interest rules for the lawyers who are picked to mediate - some might represent corporations that could bring cases before the bodies.

If Congress approves the TPP, lawmakers could find themselves whittling away at federal rules and regulations before any TPP tribunal system is even established. The tribunals themselves may lack the power to enjoin law - retaliatory tariffs levied merely buttress an incentive-based system of liberalization - but when the United States becomes party to international treaties such as the TPP, Congress must ensure that federal law is compliant.

One area where this has been a huge concern is in the realm of intellectual property law. Doctors Without Borders has denounced US proposals, saying they "threaten to roll back internationally-agreed public health safeguards and would put in place far-reaching monopoly protections that keep medicine prices high and out of the reach of millions in the Asia-Pacific region." The group says that the proposals would extend monopoly power over medicines - "a complete repudiation of the US government's own 2007 bipartisan trade policy" - by mandating "new 20-year patents for modifications of existing medicines ... without improvement of therapeutic efficacy for patients," and by making it "more expensive and cumbersome to challenge undeserved or invalid patents."

The draft has also been rumored to contain intellectual property provisions reminiscent of the Protect Intellectual Property and Stop Online Piracy Acts (PIPA/SOPA), bills that were tabled and then quickly yanked after dissent spread through cyberspace with cat-video-like speed. One of many wary legislators, Rep. Zoe Lofgren (D-California), wrote a letter to Kirk in September, expressing concern that an August leak of a draft agreement showed that the TPP would enforce "a burdensome 'three-step test' restricting the scope of limitations and exceptions" to copyright law.

Maira Sutton, a global policy analyst for the Electronic Frontier Foundation (EFF) - an organization opposed to the TPP - differentiated between the revealed agreement's "very broad" language and SOPA and PIPA. She did, however, describe the three-step test as a "vague guideline" that "could easily be interpreted to restrict exceptions and limitations to copyright." She said that the TPP, based on the leak, "could lead to web sites getting shut down for hosting copyrighted content."

In response to a question from Truthout after the February 12 panel discussion, Weisel said that the American delegation isn't "negotiating PIPA and SOPA again."

"We're negotiating something that is appropriate for a free trade agreement. So they're really separate issues," she told Truthout, insisting that the USTR has been well aware of the outrage that followed PIPA and SOPA.

Guthrie later wrote that TPP copyright provisions "follow the balanced approach that Congress established in the existing Digital Millennium Copyright Act (DMCA) and they are complemented by market-opening provisions on digital services, data flows, and e-commerce."

She added that the IP chapter seeks to "reinforce and develop existing World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property (TRIPS) rights and obligations" and that proposals being discussed take into account "trademarks, geographical indications, copyright and related rights, patents, trade secrets, data required for the approval of certain regulated products, as well as intellectual property enforcement and genetic resources and traditional knowledge."

"However," she wrote, "we also think it is possible to do more. In TPP, for the first time in an FTA, the United States has tabled a proposal that will obligate parties to seek to achieve an appropriate balance in their copyright systems in providing copyright exceptions and limitations for purposes such as criticism, comment, news reporting, teaching, scholarship, and research."

When asked about these statements, Sutton characterized the DMCA and TRIPs as stifling - they hold Internet service providers liable for copyright infringements, allow judges to levy thousands of dollars in fines for minor violations, and extend protections to authors who have been deceased for 50 years, for example. She also described the agreements as anachronistic - both were drafted before the benefits of file-sharing (or at least the inability to prove what, if any, negative effects it has) could be appreciated. - and said that "reinforcing and developing" them, as the TPP might do, could lead to Internet service providers spying on users and blocking content with little judicial oversight.

But she said that the statement about obligating parties to strike "an appropriate balance" was encouraging.

"It would be great if they obligated countries to consider other fair uses than what is already permissable under the three-step test," Sutton commented, describing the comment as a "small consolation."

But she stressed that it's impossible to assess what's going on when the working agreement itself is being kept private.

The same can be said for the other "minimum standards of treatment" that would eventually be the basis for legal challenges before panels. The USTR insists that the agreement won't hamstring legislation in the public interest, hailing the deal as a "21st-century agreement." Yet without any draft text to assess, those claims can't be verified.

Statements made at the February panel discussion, however, indicate that TPP discussions are centered around hogtying legislators and regulators. Weisel said that the USTR wants "a very deep agreement" in terms of "an ambitious outcome on services and investment, because we are still competitive in the service sectors as well as in government procurement."

"There have been lots of studies on this and all of them would demonstrate that the deeper the liberalization, the greater the benefits," she said. While that could be construed to encompass only tariffs, the scope of the vision Weisel laid out seemed to praise giving corporations a much wider berth than federal law currently allows.

"It's the non-tariff barriers and regulatory issues that companies face that we really need to do significant work on, and have been looking at carefully as key elements in TPP," she added.

The concept of non-tariff barriers, as described by Citigroup's Johnston, "has a lot to do with regulatory control by host government."

"It has a lot to do with conditions - once you're invested, you then find it very difficult to take advantage of the capital you put into the country," he stated, adding that the TPP can be useful for "not totally removing, of course, but reducing the behind-the-border barriers."

Publicly owned enterprises, for example, are being targeted by negotiators. One such entity in the United States that has been the subject of considerable interest in recent years is the Bank of North Dakota (BND) - the only fully publicly owned financial institution in the country. The BND, which is only allowed to lend wholesale, was a stabilizing force that helped keep the already energy-rich state insulated from the shock of the financial crisis (Alaska, for example, didn't fare as well). It has also brought a small fortune to the state's treasury - $340 million in net tax gain between 1997 and 2009. Legislators in at least 13 different states have proposed studying or emulating the North Dakota model - state-owned development of central-bank style institutions guaranteed by tax revenue. But if the TPP is passed, that option might not be available. Weisel said that State Owned Enterprises (SOE) are routinely "competing directly with private enterprises, and often in a way that is considered unfair."

"Some of the advantages that can be conferred on State Owned Enterprises are things like preferential financing," Weisel said. "Those are things that wouldn't be provided to private companies - preferential provision of goods and services provided by a government."

She said that "State Owned Enterprises - which in some cases can comprise a significant percentage of an economy - can be used to undermine what we're otherwise trying to gain from this free trade agreement."

A spokesperson for the BND declined to comment on whether or not this outlook was perceived by the bank to be an institutional threat. But, depending on the report's language, foreign bankers could claim that the BND stops them from lending to commercial banks throughout the state.

Citigroup's Johnston, in response to another question from the audience, said that corporations weren't exactly enamored of competition with publicly owned enterprises - and that they are prodding TPP delegates into doing something about it.

"The companies that are running up against the problem and the challenges of the state-owned enterprises, they obviously feel strongly enough about it that the problem is being addressed within the negotiations," he said.

"How it's going to ultimately flesh out in my mind is one of the big question marks in the TPP negotiations," he opined, "because you've got such a diverse array of economies at the table."

Weisel added that she didn't think SOEs should be barred by the treaty, commenting that they "are created for a lot of purposes."

"We have SOEs to address market failure, or to cover certain public services that wouldn't otherwise be covered by the private sector," she pointed out.

But in a day and age in which public institutions are commonly used as a dumping ground for private failures, when every commodity under the sun - from water utilities to public education, from security to space exploration - is targeted by free-marketeers, there can be no guarantee, until the draft is finally released, that the TPP will protect entities like the BND, especially when considering, as critics have contended, that the deal's boosters are pushing an agreement that more firmly entrenches capital flow as a form of trade.

"When you hear the word 'trade' in today's business world, it doesn't just mean goods moving across borders," Johnston said. "It doesn't even mean just services moving across borders. It also means investment. And that's something where the TPP is really gonna make a big difference."

Trade, according to Black's Law dictionary, is defined as "Traffic; commerce, exchangeof goods for other goods, or for money." Yet this trade pact could usher in a rash of reforms, with minimal oversight and virtually no public hearings, treating investment rules as a trade issue, even though they haven't traditionally been dealt with as such.

Non-corporate TPP stakeholders aren't hopeful about influencing the process, either - unlike their corporate counterparts. To actually participate in direct engagement, stakeholders have to apply for credentials with the USTR. Nathan White, a former communications aide to ex-Rep. Dennis Kucinich said the process involves something of a "catch-22."

"You have to say why you're interested in the TPP without knowing what the document actually says," he pointed out.

As far as the trade advisory committees go, members are required to sign a non-disclosure agreement in exchange for gaining access to USTR proposals - a scenario that limits their ability to advocate. The EFF, for one, decided against lobbying to join the committees for that reason.

"We don't want to give legitimacy to process that's very closed in the first place," Maira Sutton of EFF said.

She also said that the USTR has held direct stakeholder engagement at negotiation rounds, but that these symposia are diminishing in significance. She didn't expect that delegates working on certain provisions would know where to find the stakeholders with relevant comments. As such, the EFF declined to spend money on sending a team to Singapore.

Not even members of the main Trade Advisory Committee can ascertain whether or not their input is considered. The AFL-CIO is a member of the Labor Advisory Committee. Celeste Drake, a trade specialist for the union federation, has access to the USTR's proposals and said that she isn't sure what becomes of the union's commentary.

"You don't necessarily hear back about whether all of your comments and criticisms were incorporated," she said.

"Are they responsive to our concerns? That's hard to answer, given that we don't know about the text that's on the table."

She added that the AFL-CIO, in tandem with partners in other countries, wrote a model chapter on labor to submit to the USTR, though she said it was "hardly likely" that most of it will be adopted into the draft agreement.

Drake does think that the USTR is making itself available to listen to her concerns - that someone at the USTR will actually listen to her or call her back.

"They're trying to be very accessible," she said.

Despite a recent statement by the union warning that "there is a serious risk that the TPP ... will repeat the mistakes of the NAFTA trade model," she also noted that USTR representatives "have talked publicly about a very strong labor chapter, and that's good, and I think we would appreciate what they can do."

Members of the dozens of trade advisory committees can really only hope that their appeals aren't made in vain. According to federal law, the USTR "shall not be bound by the advice or recommendations of such advisory committees, but shall inform the advisory committees of significant departures from such advice or recommendations made."

Even if law mandated that committees' advice be folded into official policy, it wouldn't necessarily be in favor of the public interest. The balance of power on the committees lies with corporate representatives - members are recommended by the USTR and appointed by the president - and the boards only meet when beckoned by the USTR or "at the call of two-thirds of the members of the committee."

To make the influence-peddling even more imbalanced, over 166 lobbying clients - the majority of which are multinationals and corporate lobbyists - have filed lobbying disclosures about the TPP between 2010 and 2012. According to the Center for Responsive Politics, the Chamber of Commerce alone has filed 42 reports that mention the TPP; other top influence peddlers include the National Retail Federation (26 reports), the AFL-CIO (21), Nike (19), Google (17), Land O'Lakes (16), the American Apparel & Footwear Association (16), United Steelworkers (16), Pfizer (16), and News Corp (16). The majority of those in power are under overwhelming pressure from moneyed interests to pass the deal - perhaps one reason why Congress, by and large, hasn't made much of a fuss over being kept in the dark about the details of the deal itself.

But despite the mystery, there is substantial evidence - not least, the enthusiasm among corporate lobbyists, their intense lobbying efforts, frustration among public interest groups and disappointment on many corners of Capitol Hill - to suggest that the TPP is going to contain deregulatory initiatives and measures that usher in the privatization of publicly owned enterprises and the fencing off of the creative commons.

Corporate-Backed Trans-Pacific Partnership Shrouded in Secrecy

(Photo: Public Citizen)The Trans-Pacific Partnership (TPP), a multilateral trade deal currently being hammered out by the United States and ten other countries, could end up affecting every human being and dollar of wealth on the planet. The extent to which it will is clear to no one, apart from negotiators. But the deal, in its current form, has been in the works since 2010, involves Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam, and is open to all 21 countries in the Asia Pacific Economic Cooperation (APEC) region. US Trade Representative (USTR) Ron Kirk, who just left his post in early March, and other top negotiators have said that they would welcome China, and recent reports in the Japanese and Australian media indicate that Japan is set to join. Thus, even the most minor of edits to the draft text could end up making or breaking people from Brisbane to Bangor. But legislators around the world are being kept in the dark about what they're voting on until the deal is hammered out; it's expected to be completed this year. When it's finished, if the experience of Congress here is any indication, legislators will be feeling extraordinary pressure from corporate lobbyists and their heads of state to accept the deal without a fuss.

The smoke-filled room itself is no secret. Kirk and his counterparts have said that talks must be kept confidential, in Kirk's words, "to enable negotiators for various governments to share information and have frank conversations that result in progress toward concluding a trade agreement."

But other officials, including American legislators and their staffers, sing a different tune. They decry the opacity as a way to ram the deal through Congress.

"When challenged about the conflict with the Obama administration's touted commitment to transparency," TPP critic and Public Citizen trade lawyer Lori Wallach wrote in The Nation last year, "Trade Representative Kirk noted that after the release of the Free Trade Area of the Americas (FTAA) text in 2001, that deal could not be completed. In other words, the official in charge of the TPP says the only way to complete the deal is to keep it secret from the people who would have to live with the results."

"The Doha Round of WTO [World Trade Organization] expansion, the FTAA and other corporate attacks via 'trade' agreements were successfully derailed when citizens around the world took action to hold their governments accountable," she noted.

While there is no evidence that multinationals themselves have access to the draft agreement, a pair of well-connected corporate lobbyists told Truthout - in response to a question about the USTR's responsiveness - that they are pleased by the direction of the talks and the way in which the USTR is keeping them abreast of developments.

At a February 12 panel discussion on Capitol Hill featuring Barbara Weisel, the USTR's chief TPP negotiator, Rick Johnston, a senior vice president and director for international government affairs at Citigroup, emphatically stated that he has been "very, very, pleased" with the way the USTR has dealt with the company's TPP-related concerns.

"With a trade agreement, if you don't have the business community supporting the idea of the United States participating in that agreement, it's very likely not to happen," he said. "So the Trade Representative's office, Barbara and her team have been very, very forthcoming to the extent they can, in talking with us about this agreement, how this negotiation is going forward."

"We're very grateful with the amount of time and energy that the people at USTR devote to trying to keep us apprised and trying to test us and determine what works and what doesn't work. It's difficult. Because these are negotiating texts, the negotiators are constrained in terms of what they can and can't share with us," Johnston said, describing the business community as "sort of part of a team."

"Granted, we're not first string in terms of frontlines of the negotiations," he added, "but we've got, I think, by this engagement, what's been mutually reinforcing."

Johnston appears to be well in the know, too, as one would expect a top lobbyist for a too-big-to-fail bank to be. A press release once described him as someone who "has advised both US and foreign government leaders as well as major multinational corporations on a broad array of commercial and strategic transnational issues," adding that he has served as "international trade counsel" to the Senate Finance Committee and as an adviser to the US International Trade Commission, "an independent, quasijudicial Federal agency with broad investigative responsibilities on matters of trade." At the discussion hours before Obama feted the TPP in his State of the Union address and revealed the existence of exploratory discussions about "a comprehensive Transatlantic Trade and Investment Partnership with the European Union," Johnston foreshadowed the EU partnership and said the TPP would heavily influence it.

"The short and sweet of it is the TPP really is setting that high-water level for all these trade negotiations. And I would suggest that the TPP - you're going to see a lot of that in the International Services Agreement," referring to service trade liberalization negotiations Kirk revealed in January taking place between the United States, Japan, the EU and 18 other economies.

"You'll probably see a lot of it creep into the US-EU negotiation, which, rumor has it, might be endorsed by the president tonight," he correctly predicted.

Another lobbyist on the panel, Steve Lamar, the executive vice president of the American Apparel and Footwear Association, was similarly effusive in response to the question posed by Truthout.

"There have been opportunities for stakeholders to present and interact with the negotiators - not just the US government negotiators, but other negotiating teams as well in a variety of different fora," he said.

"There has been a lot of experimentation. I've heard some very positive feedback from a variety of groups" who participated, he commented, remarking that he had seen Weisel and other "chief negotiators" involved in the process.

"It's not just show. You really see engagement and discussion going on at the rounds themselves," Lamar said.

According to tax filings, the American Apparel and Footwear Association took in just over $5 million in revenue in fiscal year 2011, and, according to disclosures aggregated by the Center for Responsive Politics, spent $733,672 on lobbying in 2012. The association's web site claims that its board of directors is "comprised of top industry executives," including executives from New Balance, Haggar, Jockey, Donna Karan, Kenneth Cole, Perry Ellis, and others with an interest in the textile industry.

Weisel, however, stressed that the USTR is opening doors to all sorts of interest groups.

"We engage with stakeholders from the business community, from the NGO community, consumer groups, stakeholders that represent lots of different interests," she said after Johnston and Lamar lavished the USTR with praise.

Indeed, federal law requires the USTR to consult with bodies known as Trade Advisory Committees, which can include up to 45 members and "shall include representatives of non-Federal governments, labor, industry, agriculture, small business, service industries, retailers, nongovernmental environmental and conservation organizations, and consumer interests." Other single-issue advisory committees on labor, agriculture and other interests are also part of the process. Other interest groups can also stake a claim to some of the USTR's time by registering to participate in a "direct stakeholder engagement" process.

Weisel also insisted that the USTR has had a robust working relationship with Congress.

"We're spending quite a bit of time up here on the Hill," she said. "I personally spend quite a bit of time up here on the Hill. And we know that there are different perspectives on a lot of these issues, and they are important policy issues."

But some legislators and staffers on the Hill have been outspoken about what the deal could entail and how negotiations have been conducted. In November, 24 Senators wrote to President Obama expressing concerns about the TPP's potential effect on "job creation" and "middle class jobs," citing provisions about "Buy American" rules, "Rules of Origin" guidelines, labor rights, currency manipulation, state-owned enterprises, and incentives for off-shoring. One of those lawmakers, Sen. Sherrod Brown (D-Ohio) told Truthout that his feelings were "mixed" about the USTR's responsiveness to his office's concerns.

"They made some improvements ensuing from our discussions on South Korea," he said, referring to the Korea Free Trade Agreement. "They have been open on some trade enforcement issues. They aren't as aggressive as I think they should be protecting American interests and American jobs and American manufacturers. But the door's open," he commented, adding that "they're better than other administrations [have been]."

Senator Brown pointed out that his recent appointment to the Senate Finance Committee should give him firmer ground to stand on in TPP discussions. Under federal law, members of the House Ways and Means and the Senate Finance Committees are designated official advisers to the USTR. In addition to every Representative and Senator, those panels' staffers – being on "committees of jurisdiction" – are made privy to the American delegation's proposals.

Not a single person in Congress, however - or in any legislature of any country party to the deal - is allowed to even once-over the latest version of the actual draft agreement. In an email to Truthout, USTR spokesperson Carol Guthrie confirmed that senators and Congresspeople on committees of jurisdiction, along with their staffers, are only allowed to see the USTR proposals - not the working agreement. She added that "others at the discretion of the committees' chair and ranking member" are given access to USTR proposals.

"In addition, when a US TPP proposal may potentially affect issues that fall under other committees' jurisdictions - e.g., agriculture - then the committee staff have access to those TPP proposals," she added.

But the disconnect between the average rank-and-file staffer and the TPP is significant - even if the USTR's proposals were accepted in the final document verbatim - considering that the majority of those who make Congress run on a daily basis have little idea of what to expect, in terms of the legal minutiae that ends up being rather significant and difficult to comprehend. One staffer for Senator Brown told Truthout that "there are a lot of members that are not satisfied with the level of transparency."

Guthrie said that senators and their staffers must view proposal texts in a Sensitive Compartmented Information Facility, or SCIF.

"We bring the text in hard copy to their SCIF complex in the Capitol at their request. We also make our SCIF available for their use. Secondly, Senate rules require logging on to the secure web site from a secure workstation," she said.

House rules are less constraining, however.

"We bring [House] members and staff the text in hardcopy to their offices, at their request, or they can log in to the cleared advisers site from their desks and laptops," Guthrie said.

Nonetheless, with the updated draft itself guarded in confidentiality and the USTR proposal a forbidden fruit to a majority of staffers, there is a feeling on the Hill that Congressional oversight of the TPP is a formality.

The aide speculated that the pact is being pushed by USTR career bureaucrats and embraced by the Obama administration as a favor to the business community. The all-powerful Chamber of Commerce, which has lobbied extensively on the TPP, is no longer on the backfoot, as it was during debates over health care and financial reform - despite gifts to the insurance industry ingrained in the Affordable Care Act and the voluminousloopholes that lobbyists eventually helped punch into Dodd-Frank.

The TPP will give big business additional leverage through regulatory ceilings and dispute resolution tribunals. The latter, used to enforce the former, could increase international litigation risk for new regulations - a threat that already exists, courtesy of NAFTA, CAFTA and the WTO. The panels create additional legal venues in which either foreign investors can demand compensation for losses borne through "regulatory expropriation," or in which states can be awarded the right to impose retaliatory tariffs on counterparts deemed to be pushing biased regulations. They don't create additional opportunities for workers to sue a foreign country or company for allowing the murder of union leaders, nor do they offer an additional medium for a government to sue a company for environmental damage. The result is the creation of new institutions fueling the race to the bottom wrought by an interpretation of global economic integration that affords capital outsized privilege. The chilling effect on regulation is greater in poorer countries that can be cowed by the panels.

These dispute resolution tribunals, whether they mediate disputes between states or disagreements between investors and states, are said to be key to enforcing arguably the most important principal underpinning these trade agreements: "non-discrimination." If a country's own investors and companies are given preferential treatment, the deal isn't worth the paper it's printed on. But discriminatory practices aren't always at the heart of conflicts brought before tribunals. In the wake of NAFTA, for example, Mexico lost a controversial investor-state tribunal that cost its government $16 million in 2001 and cast doubt over the resilience of environmental regulations. Metalclad, an American landfill management company, had received permission from the Mexican government to operate a dump in Guadalcazar, in the state of San Luis Potosi. But while the plans had been approved by federal authorities, Metalclad had its permit to operate the landfill revoked by the state's governor in 1995. It also hadn't acquired permission from municipal authorities, which wasn't exactly an unprecedented outcome: Metalclad had purchased the site from a Mexican company called Coterin, which similarly failed to receive municipal permission to operate the landfill. There had been no sort of significant discriminatory practices in this case, but the tribunal decided that the company was not afforded a "minimum standard of treatment" that NAFTA provided to foreign investors. The decision was appealed to a Canadian court (a neutral venue). Although it disagreed with the ruling on minimum standard of treatment, it upheld most of the punitive damages. Thus, while discrimination wasn't even an issue, Metalclad was afforded a legal outlet that the Mexican company from which it acquired the asset did not have the right to.

The USTR, however, insists that these tribunals wouldn't have any sort of direct effect on regulations in the United States - that any decision made by investor state tribunals would merely levy fines and not "prevent our government or any participating government from regulating in the public interest."

"Nothing being negotiated would give any arbitration body the authority to overturn or enjoin any government measure, even one that violates the agreement," Guthrie wrote. "The neutral, international arbitration panels that can be set up under the agreement have no power or authority to direct changes to any federal, state, or local entity, period."

"US proposals recognize the right of other countries to regulate in their own public interest on financial issues, labor and the environment, and every other issue the TPP covers," she continued, "because we would never give up the right for the US government to regulate on these issues in the interest of Americans."

She added that the United States has "never lost an investor-state dispute, and never paid a penny in damages."

"The reason we can win, and do, is that these investment rules are based on the same fundamental rights already afforded to Americans and foreigners alike under the US Constitution and US laws," Guthrie continued. "Nothing in our agreements provides foreign investors with greater substantive rights than US investors already receive under US law."

She also noted that the three-mediator tribunals contain panel members selected by both a plaintiff and defendant, and one selected by both sides (failing that, "a neutral international organization" picks the mediator to round out panel).

"Transparency is also a top priority for the United States in the arbitration process. Investment arbitration hearings under US trade agreements are public and all key documents and tribunal decisions are public, as well," said Guthrie.

However, experts told Truthout that the USTR's public statements on tribunals have been problematic.

"Past victories are no predictor of how TPP rulings will turn out for the US," said AFL-CIO Trade and Global Policy Specialist Celeste Drake regarding the United States government's immaculate record at NAFTA investor-state resolution tribunals. "And legitimate public interest shouldn't be pared down anywhere," she added.

Public Citizen's Wallach was more dismissive of claims about the United States having never lost anything in investor-state dispute courts. Taxpayers must shoulder the burden of tribunal costs "even when cases are dismissed," she said.

With respect to the USTR's claims on transparency, Wallach said that the World Bank investor-state tribunal system empowered by NAFTA doesn't release documents "or even notice a case is happening" unless plaintiffs agree to it.

She said that there are no conflict-of-interest rules for the lawyers who are picked to mediate - some might represent corporations that could bring cases before the bodies.

If Congress approves the TPP, lawmakers could find themselves whittling away at federal rules and regulations before any TPP tribunal system is even established. The tribunals themselves may lack the power to enjoin law - retaliatory tariffs levied merely buttress an incentive-based system of liberalization - but when the United States becomes party to international treaties such as the TPP, Congress must ensure that federal law is compliant.

One area where this has been a huge concern is in the realm of intellectual property law. Doctors Without Borders has denounced US proposals, saying they "threaten to roll back internationally-agreed public health safeguards and would put in place far-reaching monopoly protections that keep medicine prices high and out of the reach of millions in the Asia-Pacific region." The group says that the proposals would extend monopoly power over medicines - "a complete repudiation of the US government's own 2007 bipartisan trade policy" - by mandating "new 20-year patents for modifications of existing medicines ... without improvement of therapeutic efficacy for patients," and by making it "more expensive and cumbersome to challenge undeserved or invalid patents."

The draft has also been rumored to contain intellectual property provisions reminiscent of the Protect Intellectual Property and Stop Online Piracy Acts (PIPA/SOPA), bills that were tabled and then quickly yanked after dissent spread through cyberspace with cat-video-like speed. One of many wary legislators, Rep. Zoe Lofgren (D-California), wrote a letter to Kirk in September, expressing concern that an August leak of a draft agreement showed that the TPP would enforce "a burdensome 'three-step test' restricting the scope of limitations and exceptions" to copyright law.

Maira Sutton, a global policy analyst for the Electronic Frontier Foundation (EFF) - an organization opposed to the TPP - differentiated between the revealed agreement's "very broad" language and SOPA and PIPA. She did, however, describe the three-step test as a "vague guideline" that "could easily be interpreted to restrict exceptions and limitations to copyright." She said that the TPP, based on the leak, "could lead to web sites getting shut down for hosting copyrighted content."

In response to a question from Truthout after the February 12 panel discussion, Weisel said that the American delegation isn't "negotiating PIPA and SOPA again."

"We're negotiating something that is appropriate for a free trade agreement. So they're really separate issues," she told Truthout, insisting that the USTR has been well aware of the outrage that followed PIPA and SOPA.

Guthrie later wrote that TPP copyright provisions "follow the balanced approach that Congress established in the existing Digital Millennium Copyright Act (DMCA) and they are complemented by market-opening provisions on digital services, data flows, and e-commerce."

She added that the IP chapter seeks to "reinforce and develop existing World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property (TRIPS) rights and obligations" and that proposals being discussed take into account "trademarks, geographical indications, copyright and related rights, patents, trade secrets, data required for the approval of certain regulated products, as well as intellectual property enforcement and genetic resources and traditional knowledge."

"However," she wrote, "we also think it is possible to do more. In TPP, for the first time in an FTA, the United States has tabled a proposal that will obligate parties to seek to achieve an appropriate balance in their copyright systems in providing copyright exceptions and limitations for purposes such as criticism, comment, news reporting, teaching, scholarship, and research."

When asked about these statements, Sutton characterized the DMCA and TRIPs as stifling - they hold Internet service providers liable for copyright infringements, allow judges to levy thousands of dollars in fines for minor violations, and extend protections to authors who have been deceased for 50 years, for example. She also described the agreements as anachronistic - both were drafted before the benefits of file-sharing (or at least the inability to prove what, if any, negative effects it has) could be appreciated. - and said that "reinforcing and developing" them, as the TPP might do, could lead to Internet service providers spying on users and blocking content with little judicial oversight.

But she said that the statement about obligating parties to strike "an appropriate balance" was encouraging.

"It would be great if they obligated countries to consider other fair uses than what is already permissable under the three-step test," Sutton commented, describing the comment as a "small consolation."

But she stressed that it's impossible to assess what's going on when the working agreement itself is being kept private.

The same can be said for the other "minimum standards of treatment" that would eventually be the basis for legal challenges before panels. The USTR insists that the agreement won't hamstring legislation in the public interest, hailing the deal as a "21st-century agreement." Yet without any draft text to assess, those claims can't be verified.

Statements made at the February panel discussion, however, indicate that TPP discussions are centered around hogtying legislators and regulators. Weisel said that the USTR wants "a very deep agreement" in terms of "an ambitious outcome on services and investment, because we are still competitive in the service sectors as well as in government procurement."

"There have been lots of studies on this and all of them would demonstrate that the deeper the liberalization, the greater the benefits," she said. While that could be construed to encompass only tariffs, the scope of the vision Weisel laid out seemed to praise giving corporations a much wider berth than federal law currently allows.

"It's the non-tariff barriers and regulatory issues that companies face that we really need to do significant work on, and have been looking at carefully as key elements in TPP," she added.

The concept of non-tariff barriers, as described by Citigroup's Johnston, "has a lot to do with regulatory control by host government."

"It has a lot to do with conditions - once you're invested, you then find it very difficult to take advantage of the capital you put into the country," he stated, adding that the TPP can be useful for "not totally removing, of course, but reducing the behind-the-border barriers."

Publicly owned enterprises, for example, are being targeted by negotiators. One such entity in the United States that has been the subject of considerable interest in recent years is the Bank of North Dakota (BND) - the only fully publicly owned financial institution in the country. The BND, which is only allowed to lend wholesale, was a stabilizing force that helped keep the already energy-rich state insulated from the shock of the financial crisis (Alaska, for example, didn't fare as well). It has also brought a small fortune to the state's treasury - $340 million in net tax gain between 1997 and 2009. Legislators in at least 13 different states have proposed studying or emulating the North Dakota model - state-owned development of central-bank style institutions guaranteed by tax revenue. But if the TPP is passed, that option might not be available. Weisel said that State Owned Enterprises (SOE) are routinely "competing directly with private enterprises, and often in a way that is considered unfair."

"Some of the advantages that can be conferred on State Owned Enterprises are things like preferential financing," Weisel said. "Those are things that wouldn't be provided to private companies - preferential provision of goods and services provided by a government."

She said that "State Owned Enterprises - which in some cases can comprise a significant percentage of an economy - can be used to undermine what we're otherwise trying to gain from this free trade agreement."

A spokesperson for the BND declined to comment on whether or not this outlook was perceived by the bank to be an institutional threat. But, depending on the report's language, foreign bankers could claim that the BND stops them from lending to commercial banks throughout the state.

Citigroup's Johnston, in response to another question from the audience, said that corporations weren't exactly enamored of competition with publicly owned enterprises - and that they are prodding TPP delegates into doing something about it.

"The companies that are running up against the problem and the challenges of the state-owned enterprises, they obviously feel strongly enough about it that the problem is being addressed within the negotiations," he said.

"How it's going to ultimately flesh out in my mind is one of the big question marks in the TPP negotiations," he opined, "because you've got such a diverse array of economies at the table."

Weisel added that she didn't think SOEs should be barred by the treaty, commenting that they "are created for a lot of purposes."

"We have SOEs to address market failure, or to cover certain public services that wouldn't otherwise be covered by the private sector," she pointed out.

But in a day and age in which public institutions are commonly used as a dumping ground for private failures, when every commodity under the sun - from water utilities to public education, from security to space exploration - is targeted by free-marketeers, there can be no guarantee, until the draft is finally released, that the TPP will protect entities like the BND, especially when considering, as critics have contended, that the deal's boosters are pushing an agreement that more firmly entrenches capital flow as a form of trade.

"When you hear the word 'trade' in today's business world, it doesn't just mean goods moving across borders," Johnston said. "It doesn't even mean just services moving across borders. It also means investment. And that's something where the TPP is really gonna make a big difference."

Trade, according to Black's Law dictionary, is defined as "Traffic; commerce, exchangeof goods for other goods, or for money." Yet this trade pact could usher in a rash of reforms, with minimal oversight and virtually no public hearings, treating investment rules as a trade issue, even though they haven't traditionally been dealt with as such.

Non-corporate TPP stakeholders aren't hopeful about influencing the process, either - unlike their corporate counterparts. To actually participate in direct engagement, stakeholders have to apply for credentials with the USTR. Nathan White, a former communications aide to ex-Rep. Dennis Kucinich said the process involves something of a "catch-22."

"You have to say why you're interested in the TPP without knowing what the document actually says," he pointed out.

As far as the trade advisory committees go, members are required to sign a non-disclosure agreement in exchange for gaining access to USTR proposals - a scenario that limits their ability to advocate. The EFF, for one, decided against lobbying to join the committees for that reason.

"We don't want to give legitimacy to process that's very closed in the first place," Maira Sutton of EFF said.

She also said that the USTR has held direct stakeholder engagement at negotiation rounds, but that these symposia are diminishing in significance. She didn't expect that delegates working on certain provisions would know where to find the stakeholders with relevant comments. As such, the EFF declined to spend money on sending a team to Singapore.

Not even members of the main Trade Advisory Committee can ascertain whether or not their input is considered. The AFL-CIO is a member of the Labor Advisory Committee. Celeste Drake, a trade specialist for the union federation, has access to the USTR's proposals and said that she isn't sure what becomes of the union's commentary.

"You don't necessarily hear back about whether all of your comments and criticisms were incorporated," she said.

"Are they responsive to our concerns? That's hard to answer, given that we don't know about the text that's on the table."

She added that the AFL-CIO, in tandem with partners in other countries, wrote a model chapter on labor to submit to the USTR, though she said it was "hardly likely" that most of it will be adopted into the draft agreement.

Drake does think that the USTR is making itself available to listen to her concerns - that someone at the USTR will actually listen to her or call her back.

"They're trying to be very accessible," she said.

Despite a recent statement by the union warning that "there is a serious risk that the TPP ... will repeat the mistakes of the NAFTA trade model," she also noted that USTR representatives "have talked publicly about a very strong labor chapter, and that's good, and I think we would appreciate what they can do."

Members of the dozens of trade advisory committees can really only hope that their appeals aren't made in vain. According to federal law, the USTR "shall not be bound by the advice or recommendations of such advisory committees, but shall inform the advisory committees of significant departures from such advice or recommendations made."

Even if law mandated that committees' advice be folded into official policy, it wouldn't necessarily be in favor of the public interest. The balance of power on the committees lies with corporate representatives - members are recommended by the USTR and appointed by the president - and the boards only meet when beckoned by the USTR or "at the call of two-thirds of the members of the committee."

To make the influence-peddling even more imbalanced, over 166 lobbying clients - the majority of which are multinationals and corporate lobbyists - have filed lobbying disclosures about the TPP between 2010 and 2012. According to the Center for Responsive Politics, the Chamber of Commerce alone has filed 42 reports that mention the TPP; other top influence peddlers include the National Retail Federation (26 reports), the AFL-CIO (21), Nike (19), Google (17), Land O'Lakes (16), the American Apparel & Footwear Association (16), United Steelworkers (16), Pfizer (16), and News Corp (16). The majority of those in power are under overwhelming pressure from moneyed interests to pass the deal - perhaps one reason why Congress, by and large, hasn't made much of a fuss over being kept in the dark about the details of the deal itself.

But despite the mystery, there is substantial evidence - not least, the enthusiasm among corporate lobbyists, their intense lobbying efforts, frustration among public interest groups and disappointment on many corners of Capitol Hill - to suggest that the TPP is going to contain deregulatory initiatives and measures that usher in the privatization of publicly owned enterprises and the fencing off of the creative commons.